Monsoon Impact On Economy: Too Early To Be Comfortable About Overall Effect, Says Citi

The Indian monsoon has started eight days ahead of its usual date, with approximately 266% above-normal rainfall in the second half of May.

In it's latest report, Citi identified five episodes of early-onset monsoon over the past 25 years. Interestingly, full-season rainfall was deficient in these episodes, food inflation rose in four out of five cases, and kharif crop production was down year-on-year twice. This suggests that "it is too early to be comfortable about the overall monsoon impact," the report stated.

But on the bright side, it said, despite the heavy rainfall, "there has been no significant drop in market arrivals for key crops over the past 15–20 days, except for rice." The harvest period was mostly over before the heavy rainfall began, and food price data shows no significant surge. Citi expects a 0.2 percentage point fall in food and beverage inflation in May, with headline inflation around 3.0% year-on-year.

The India Meteorological Department declared May 24 as the arrival of the monsoon, compared to the normal start date of June 1.

This is the earliest monsoon onset for mainland India since 2009. All-India rainfall was approximately 266% from May 16–31, 2025, above the long period average.

Heavy rainfall was observed across the country, particularly in south and central India. In the first three days of June, monsoon was 29% above LPA, driven by excess rainfall in northwest and east India.

This early rainfall could have two opposing effects on the summer crop, Citi said. On one hand, "higher soil moisture could lead to early sowing of crops and better productivity in some regions". On the other hand, "there is a view that farmers need a dry period between two crops to regenerate soil fertility", which might have been affected by the early rains, Citi noted.